The German solar panel manufacturer SolarWorld AG, (ETR: SWV) which is spearheading the movement against Chinese PV manufacturers such as Suntech Power Holdings Co., Ltd. (ADR) (NYSE:STP) and Trina Solar Limited (ADR) (NYSE:TSL), has released its Q3 results. Their shipments for the first nine months of 2012 have increased by 13.3%, but revenues have slumped by more than one-third amid mounting price pressure from oversupplies. Moreover, SolarWorld was counting on the demand for rooftop systems to rise in Germany, which should have given a boost to its earnings, but it is clear that this did not happen. Although the German photovoltaic market added 1.8GW in Q3-2012, as opposed to 1.6GW in Q3-2011, most of that growth happened in ground-mounted systems instead of the rooftop segment in which SolarWorld specializes.
SolarWorld’s revenues have decreased by 41% from the year-ago quarter to $164M, as it went from making a positive EBIT of $24.5M in Q3-2011 to a negative $58.36M in Q3-2012. Similarly, for the first nine months of its fiscal year, SolarWorld’s revenues have fallen by 37.7% to $597.7M, while its EBIT reached negative $241.6M, which translates into a loss per share of $2.65. However, the company’s total shipments for the first nine months improved by 13.3% from 381MW in 2011 to 431 MW in 2012. The business has also identified that since it failed to meet its covenants by the end of H1-2012, it will therefore not be able to use “any of SolarWorld AG’s undrawn credit facilities at the moment.”
On a nine-month comparative basis, it seems that the firm is becoming more German focused. The U.S. market is still contributing 20% to the company’s revenues, but the revenue contribution from the “Asia” and the “Rest-of-the-world” (ROW) regions have fallen from 11% and 10% in 9M-2011 to just 4% and 5% in 9M-2012. While the revenue contribution of the “Rest of Europe” region has increased slightly from 19% in 9M-2011 to 21% in 9M-2012, Germany’s contribution has increased from 40% in 9M-2011 to 50% in 9M-2012. The CEO of MEMC Electronic Materials, Inc. (NYSE: WFR), Ahmad Chattlaia, had identified previously that future growth lies in diversity, while SolarWorld’s German peer Conergy AG is making significant inroads in Asia. So far, this year, SolarWorld has done the exact opposite.
In his letter to the shareholders, the company CEO Dr. Frank Asbeck said, “The ongoing price decline since the beginning of the year has taken its toll on SolarWorld. Although we were able to increase shipments of solar modules and kits, our revenue went down considerably. At the end of the day, the result was significantly negative.” The chief executive believes that success lies in pushing toward research and development by producing more efficient innovative products, as well as cutting down costs, which will come from even more layoffs. However, Dr. Asbeck still believes that the root cause of the problems comes from Chinese manufacturers; therefore, “the EU in particular must follow the footsteps of the U.S. and take action as quickly as possible!”
